Salary or Challenge - Which is Better ?

Does earning a higher salary make you happier? It’s an issue that tugs at many of us: the tradeoff between a satisfying job and a satisfying paycheck. Students have to ponder the question when considering a college major or embarking on a career.

Workers are concerned about it when weighing a promotion that would bring longer hours and more stress along with higher pay. In many ways, achieving the right balance depends on one’s values, priorities, family obligations and spending habits. But, according to a recent study in the Proceedings of the National Academy of Sciences, there is something of a magic number when it comes to income and happiness.

Beyond household income of $75,000 a year, money “does nothing for happiness, enjoyment, sadness or stress,” the study concluded. It’s not so much that money buys you happiness but that lack of money buys you misery, said Daniel Kahneman, a professor emeritus of psychology at Princeton and one of the authors of the study. “The lack of money,” he said, “no longer hurts you after $75,000.”

Where you live and the cost of living there has only a small influence on that number, he added. (That may be a revelation to some Manhattanites.) The study, which analyzed Gallup data of 450,000 randomly selected Americans, did find that one’s “life evaluation”, a self-assessment of one’s life, continued rising well above $75,000. But this is not the same as experiencing day-to-day happiness.

“Many people want to make a lot of money, but the benefits of having a high income are ambiguous,” said Kahneman, who is also a Nobel laureate in economics. When you are wealthy, you are able to buy more pleasures, but a recent study suggests that wealthier people “seem to be less able to savor the small things in life,” he said.

Even so, some people seem almost hardwired to want to make money. A 2007 article in The Journal of Happiness Studies reported that college freshmen who stated that they wanted a high salary by and large achieved that goal 20 years later.

The article said that “individuals with strong financial aspirations are socially inclined, confident, ambitious, politically conservative, traditional, conventional, and relatively less able academically, but not psychologically distressed.”

People who sought high incomes were more likely to major in things like business, engineering and economics, it said, while people for whom high income was not paramount gravitated toward the liberal arts and social sciences. “Wanting money is not a recipe for disaster, but wanting money and not getting it, that’s a good recipe for disaster,” Kahneman said.

People who want to become performing artists are likely to be unhappy, because most will fail, he said. Becoming a wealthy rock star is a common dream when you are young, but when you are in college, you should try to take a longer-term view, he said.

These days, of course, many people are worried about whether they will get a job at all. Understandably, the recession is causing more people to place the financial rewards of a career first, said Nicholas Lore, founder of the Rockport Institute, a career coaching firm, and author of “The Pathfinder.”

This could backfire, though, as people who initially pursue a field because of the salary realize that the work is unsatisfying. Lore has recently coached a lawyer who decided to forgo his high pay in favor of teaching law, an investment banker who decided to switch to a green energy company and a dentist who decided to become a schoolteacher.

It all depends on priorities, Lore said. Some people are willing to make lifestyle changes because the intrinsic rewards of following a passion or making a difference are more important than a high salary in an unenjoyable career, he said.

In the end, people should pursue what they’re interested in, said Daniel H. Pink, author of “Drive: The Surprising Truth About What Motivates Us.” Looking at lists of careers with the highest salaries tends to be a fool’s game, he said. “It’s very hard to game the system, in the sense that situations and conditions change so quickly that a field that is hot today might be only lukewarm in five or 10 years,” he said. “It might even be nonexistent.”

Let’s say you see that accountants are getting decent salaries directly out of college, he said, but you don’t really like accounting. “Chances are you’re not going to be very good at accounting,” and your salary will reflect that, he said. “Generally, people flourish when they’re doing something they like and what they’re good at.”

For his part, Lore said he was concerned that current economic woes might force people into poor career choices. “I would prefer that the economy was doing better and people were more adventurous because it often has an enormous effect on the quality of their life,” he said. Many people equate success with a high income, but, “How can someone say they’re successful if they’re not happy doing their work? To me, that’s not success.”

Source ET.com

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How is Salary Calculated ?

Sanjeev Sinha, ECONOMICTIMES.COM

Negotiating one’s salary successfully is a tricky thing. Simply because while the job seeker is generally interested in getting more, the job provider is usually keen on paying as less as possible. It is only for some job providers that salary is not an issue so long as the marginal contribution the employee is going to make is higher than the salary he or she takes. But how is one’s salary determined?

“Ordinary companies follow the 3,2,1 principle, which means hire three people, pay them the salary of two persons and get the work of one person. In contrast, extraordinary companies follow the 1,2,3 principle, whereby they employ one person, pay them double the salary and get the output of three persons,” says Dr C S Venkata Ratnam, director of the International Management Institute, Delhi.

According to Dr Ratnam, employees are interested in higher salary and good employers do not mind paying it so long as wage costs are lower through higher productivity or contribution that the person is willing and is able to make.

It is, however, difficult to put a price on one’s head. Similarly, it is equally difficult for one to estimate one’s own worth. A director of an IIT institute once said, “For some what I am paying is more than they deserve, for a few others, no matter how much more I pay, that is still not an adequate consideration because intrinsically they are so good.”

Thus, “while on the issue of salary, three types of equities become important. One is personal equity, i.e., what a person thinks about one’s worth. Here the expectancy theory says that a person can be unhappy not only when one gets less, but also when one gets more. For, the person may feel that if the company is paying him 10 per cent more than what he deserves, what is the guarantee that it is not paying someone 15 per cent more?” informs Dr Ratnam.

Some people also suffer by what is known as theory of relative deprivation. Here one’s happiness or otherwise is dependent on not how much one is getting, but in relation to someone else with whom one is making the comparison. Companies, therefore, try to figure out personal equity based on pay satisfaction surveys.

The second is internal equity which is about the relative worth of different jobs based on considerations of skill, effort, responsibility and working conditions or as the Hay System measures in respect of professionals, know how, responsibility and problem solving skills.

“Job evaluation is the best method to systematically determine the relative worth of jobs. Proper job evaluation will help compare a nurse’s job with that of a police constable. Also, relative worth of different jobs can often be subjective,” says Dr Ratnam.

Thus, whether a gas cutter should get more or a grass cutter depends on the nature of industry and importance of the job. In an engineering assembly industry, welding being a highly rated technical job, gas cutters get more. But in a horticulture department, a welder may get less and a gardener more.

The third is external equity which is assessed through the survey of compensation practices across firms in the same or similar industries and region. Usually the comparison is based on the types of industries where similar skills are sought after.

Determination of pay

Thus, employers use three sets of instruments -- pay satisfaction, job evaluation and compensation surveys -- to provide the basis for equity and fairness in their compensation policies and practices. But ultimately pay is determined by different employers based on their policies (being the best pay master in the industry/region, for instance) and the dynamic equilibrium between demand and supply for the skill sets concerned.

The problem from the individual concerned is that if one gets what one wants, one wonders whether one should have asked more. Therefore, “if one is in the market, one should do some home work on the most recent/current trends in the market as far as compensation is concerned and accordingly pitch for it -- neither too low, nor too high,” suggests Dr Ratnam.

“At times, the candidate is hesitant on talking about the salary expectations. There is nothing wrong in expressing your expectations but of course, it must match the industry trend. 25–30% is the typical salary expectation one has, while contemplating a job change,” says Shrikant Dikhale, VP-HR, Kansai Nerolac Paints Ltd.

However, if you have adequate skill set for a job and are also very confident that very few can match your skills, you can even ask for more.

Source ET

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Will linking of CEOs compensation to Cos Performance help ?

New Delhi, May 6 (IANS) A majority of Indian firms believe that there is a need to evaluate the performance of the top management and board members and to link the salaries of chief executives to corporate performance, said a report released by auditing major KPMG Wednesday.

The report, 'The State of Corporate Governance in India: 2008', prepared on the basis of a corporate governance poll conducted by KPMG in India, said about 85 percent of the respondents said linking CEO remuneration to company performance would help improve corporate governance.

'CEO performance evaluation process should be introduced when the company is performing well. Evaluation of CEO performance sends a clear message that the CEO is accountable to the board and introduces a healthy balance of power,' the report said.

About 71 percent of executives said India did not have stringent penalty for poor corporate governance comparing to developed countries, the report said.

'There are a few areas where regulation could be strengthened such as limiting the number of directorships, mandating greater role for nomination committees in independent director appointments and instituting swift and stringent punishments,' said Neville Dumasia, executive director and head of governance, risk and compliance services at KPMG.

The poll has also highlighted that there is a need for greater empowerment of independent directors and measures to protect minority shareholder interests.

'So long as we continue to have a process wherein independent director appointments are largely driven by promoters, empowerment of independent directors and protecting minority shareholder interests will continue to be areas of concern,' said Richard Rekhy, chief operating officer and head of advisory services at KPMG India.

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Salary hikes will be minimail for 2009

Brace up for a bad increment season. The annual Salary Increase Survey by human resource firm Hewitt Associates, India Inc will see salaries rising by only 8.2 per cent – the lowest in six years.

It could be worse. Hewitt warns that another 2 percentage pints could be snipped off the raise. Those who get this should consider themselves lucky – sort of. For, at the top management levels, there could actually be a salary contraction by as much as 40 per cent.

In most cases the raise will not even cover the inflation rate if the consumer price index were to be taken as the yardstick. (On this basis, inflation was 10.8 per cent in January.) In other words, your ‘real’ income in 2009 could be less than last year.
Some sectors that handed out the best raises last year will be the stingiest. Among them are retail (expected to give only 5.3 per cent raise), infotech (5.7 per cent), banking & financial services (6.3 per cent), oil & gas (7.3 per cent) and entertainment & publishing (7.5 per cent). The last three were expected in the 2008 Hewitt report to be the most generous, handing out raises of 17.5 per cent, 16.2 per cent and 16.9 per cent, respectively.

Ravi Dhariwal, CEO, Bennett Coleman, declined to comment to Financial Chronicle on why media was seen as tightfisted this year. A K Balyan, human resources director of ONGC only said, “I don’t know how they (Hewitt) have arrived on these figures.”
Ganesh Natarajan, Nasscom chairman, said, “The raises in IT will be in the range of 7 to 8 per cent, which is as high as any other service sector.”
Among the sectors Hewitt expects to be most generous this year are pharmaceutical (giving an average raise of 13 per cent), telecom (11.3 per cent), fast moving consumer goods and durables (11 per cent), chemicals (10.9 per cent) and hospitals (10.8 per cent).

Many in these industries disagreed with the findings of the report. Amar Lulla, Cipla joint managing director, said, “I don’t think salary hikes will be so much. At the most they will be around 5 to 7 per cent (in pharmaceutical sector).”
Harpal Singh, Fortis Healthcare chairman, thought salaries in healthcare would grow by between 7 and 11 per cent. Dabur and Britannia did not respond to our queries.
Surprisingly, Hewitt does not have data on the real estate sector, which, it said last year, would see a 25 per cent salary hike. The reality was far from this. Pradeep Jain, chairman of Parshvnath Developers, is on record that salaries at the senior management level in real estate companies had, in fact, gone down by between 15 and 20 per cent.

The report indicates that 16 per cent of 480 companies surveyed have frozen salaries and 12.6 per cent are considering retrenchment, according to Sandeep Chaudhury of Hewitt.

The report also says that salaries at the top levels are the most vulnerable. The management may have to take actually take a cut of 40 per cent, and senior and middle management will their pay shrink by 39 per cent.


Author - Ronojoy Banerjee,Jayashree Maji also contributed to this article.
Source : mydigitalfc.com

Pay rises in US for 2009

Someone Is Getting a Raise—but Perhaps Not You

To the employees who thought 2009 was the year of the pay freeze: You were wrong, at least so far.

Contrary to the sour economic mood, employers are giving salary increases averaging 3.1 percent in 2009, according to a survey of 1,000 employers by human resources organization WorldatWork. Only 10 percent of employers are freezing salaries of their workers, both WorldatWork and Hewitt Associates report in separate surveys of employers.

Still, wage growth is slowing and is expected to slow further. Companies projected lower salary increases in December than the 3.8 percent increase they had anticipated when WorldatWork surveyed companies in April about projected salary increases for 2009. As companies revise their budgets, they are lowering raises. Still, it’s better than nothing—which is what about one in 10 employers say they will give non-executive-level employees this year, according to the study.

“Organizations are scaling back, but there seems to be a very clear effort to reward employees,” said Alison Avalos, practice leader for Scottsdale, Arizona-based WorldatWork. “If you have a job … you’re in a good position to receive a pay increase this year.”

In another survey, Hewitt Associates reported that 50 percent of U.S. employers are cutting salary increases for 2009. Perhaps more important, 35 percent are laying off workers and 39 percent have instituted hiring freezes.

Other economic indicators paint a much gloomier picture: The Dow Jones industrial average has dipped to below 8,000 from a high of 14,000 in October 2007; the Consumer Confidence Index dropped to another historic low in January, the Conference Board reported January 27; and the Bureau of Labor Statistics also reported last month that in 2008, salaries increased an average of 2.6 percent, less than the projection for 2009 by WorldatWork.

Conference Board economist Ken Goldstein said changes in wages often lag behind declines in the economy and lost jobs.

“With a loss of half a million jobs in November and again in December, and very likely in January, wage growth will slow even more over the next few months,” Goldstein wrote in an e-mail.

According to WorldatWork, executives were more likely to take a pay freeze. About 17 percent of employers surveyed said executives would not receive a raise in 2009.

Across industries and regions, businesses reduced the raises they originally planned to give employees. Half the businesses responding to the survey said their company’s financial performance was worse than in 2007 and that they anticipated a decline in business this year.

Contrary to expectations, hard-hit industries such as manufacturing and finance were no more likely to reduce payouts than other industries, despite receiving federal bailout money.

“It seems those industries are no more affected than any other,” Avalos said. “Everyone has scaled down to the same degree.”

Manufacturing companies said in April that white-collar workers would receive a 3.8 percent raise for 2009, equal to the national average. In December, when the latest survey was taken, the industry reported that white-collar workers would receive an average 2.9 percent raise.

Financial companies projected in April that they would increase salaries for white-collar workers an average of 3.9 percent; as of December that number was 3.2 percent, in both cases just above the national average.

Depending on how one looks at it, the small percentage of workers who had their pay frozen will not see their overall buying power drastically reduced. The Consumer Price Index, a major indicator for gauging inflation reported by the Bureau of Labor Statistics, rose 0.1 percent as of the end of 2008 compared with a year earlier, as the drop in fuel prices brought overall costs down.

—Jeremy Smerd

Source : Workforce Management

No salary Hikes for 2009

Bangalore: The world’s largest personal computers maker, Hewlett-Packard Co., or HP, will not offer annual salary increases due in February to employees, including those in India, where around one-fifth of its workforce is based. 'In this difficult macroeconomic environment, we believe it is prudent to reduce costs where possible.’

HP also plans to cut discretionary, or optional, spending to tide over the global economic crisis that has hit companies’ technology budgets. HP, which employs 320,000 people globally, of which 60,000 are in India, will limit fresh hiring to jobs that focus on generating revenue. “These are difficult actions, but necessary in the current environment,” HP’s leadership team, headed by chief administrative officer Pete Bocian, said in an email to staff on 27 November.

The average increase is usually around 14%, said an HP India employee, who did not want to be named. The internal email, reviewed by Mint, encourages staff to have meetings “virtually” or through technologies such as video and teleconferencing and restrict travel to customer activities.

An HP India spokeswoman said the firm has a long-standing and disciplined approach to managing costs, but declined to reveal potential savings. “In this difficult macroeconomic environment, we believe it is prudent and responsible to reduce costs where possible,” said Bina Raj Debur, director for corporate marketing at HP India, in an email.

Analysts say salary increases across Indian technology service firms could be zero or minimal in 2009. Senior personnel could see their salaries come down because their pay includes a variable component of as much as 35% tied to them meeting specific benchmarks. At Indian firms, performance appraisals are due from April.
“Basically, I don’t see a salary hike in 2009, mainly in software and BPO (business process outsourcing) industry.

In fact, (there will) be an overall reduction in compensation by (as much as) 20% for senior management,” said Kris Lakshmikanth, chief executive at Head Hunters India Pvt. Ltd, an executive search firm.

Technology service firms such as Tata Consultancy Services Ltd (TCS), Infosys Technologies Ltd and Wipro Technologies Ltd are also economizing through measures such as reducing power consumption, cutting travel and postponing capital expenditure such as buying new computers.

TCS can save around 2% of average sales and general expenses of 20% through a combination of such measures, said Vish Iyer, chief financial officer, global business operations, at the Mumbai company.

On 2 December, The Economic Times newspaper reported that Infosys CEO S. Gopalakrishnan had asked employees to reduce costs by at least $10 (about Rs500) each in a one-time effort.

“Infosys has over 100,000 employees and each employee has the potential to make a difference to the company’s success,” the company said.

Source : Livemint.com